Matt has a chart for you. Who is next, president xi advancing no clear successor. We will take you live to tiananmen square. The bank of england hiking rates , that is one of the big questions. We have an Interest Rate outlook from metro banks ceo. Than half anless hour away from the start of european trading after new records in the u. S. Line lets take a look at what u. S. Futures are doing. They are down across the board and we have the ibex in here. We expect to hear from the whetherseparatists on they will fully declare independence and on friday you get that vote in the senate to will take over. You can see we have come above this 2. 4 level which is not really magical for any other reason than no gross pointing that out as his indication that the bull market in u. S. Treasuries is over. We have been above 2. 4 at other points in the beginning of the year. Jeff good luck saying it is you are die time for treasury bulls incomemart fixed analyst says if powell becomes the fed chair guy that could inspire a drop of five basis points in the treasury yield. If taylor becomes the chair, the next fed chair, that could spark a 10 basis point rise in treasury yields so i think it is almost a binary situation to take yellen out of the equation. Guy there is an interesting piece on the terminal that talks about the fact that the market him a have taylor wrong. That the market may have taylor wrong. More relaxed than howell or yellen will be. Maybe we are misrepresenting mr. Taylor. The gmm is the most fantastic thing this morning. There are a bunch of stories you can tweak out of it around the world so lets run us around, what is going on. India. India is an amazing story this morning. India has a bunch of banks that have an npl program problem. They just did it. Thisndian banks are up 20 morning. Take a look at the indian market. Take a look at the charts, it is really worth a look area take a look at india. The other story is the argentinian story. This is the question asked this morning. By 150 basis points. You think how is the peso going to react and you realize that this came after the peso had closed trading for the day. We will wait and see how the peso opens later on. I 250ina raced rates basis points after macri did well in the elections. Plenty of other stories out there. Were watching what is happening in china and figuring out what is happening and the u. S. , data dropping in the u. K. , interesting trend stories out there that are worth paying attention to. Lets get a bloomberg first word news update juliette . Juliette chinas president has unveiled a new leadership lineup that includes no potential heirs. All five men appointed to join old to rule for a decade. That breaks with a succession system and raises the chances he might seek to stay in office be on to 2022. We will build on the good momentum to continue modernizing chinas system and capacity for governments. And make efforts to comprehensively reform and open china still wider to the world. Juliette jeff flake has become the second republican senator to donald trump. He will not seek reelection and then delivered a blistering attack from the senate for describing his actions as reckless, outrageous, and undignified. The remarks followed a series of interviews in which Tennessee Center senator bob corker denounced trump. Firms have a big win in their battle against regulations. Vice president mike pence was called into cass the tiebreaking vote. The move using the power to overturn agency rules follows a similar vote white house in july. Crushs plan to catalonian separatists is raising alarm bells. The socialists are balking at the emphasis on taking control and shutting up options that cattlellied allow the and leadership a dignified retreat. A decisive few days in a conflict with the insurgent region. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy thank you. Rose fiveeasury notes basis points closing above 2. 4 for the First Time Since may. This come after republican lawmakers [inaudible] refusedrs refute to vote. This was at a lunch the president was having and he notd to put their hands up, exactly the way you pick a fed chair. Most cap their hands down but those who voted it seem on margin to favor taylor. The 2. 4 line is interesting. Mark cudmore is with us out of singapore. Plurimiarmstrong from wealth joining us. 2. 4, why is it important and will it hold . In a shortterm technical level. Mark he has called many of the last zero bond rates. The fact is this is not from a big level. We might see some fallout but i do not think the game is necessarily changed it. It might change with a new fed chair but that i am suspicious of. People are excited about taylor as a candidate because he made a plea that he might be more dovish. Taylor a not be that hawkish if adapt for todays environment. We are likely to get a more dovish chair the but if we get taylor we can get a decent spike in yields that will last for weeks. Matt that is something i think him a you mentioned there is a bloomberg story on it, guy and i read the story. There are a lot of smart strategists on wall street who do think that appointing taylor would mean of rise in 10 year yields. I wonder, patrick, if you agree . Shortk we are treasuries, 10 year yields are moving higher, over the next 12 months. It is not a call on taylor being the next fed chair. It seems he would a more hawkish than powell which characterized as a status quo with yellen. We think Interest Rates are too low, we think the fed has highest the hike. , thets underestimating market is pricing in not even 100 chance for year this year. The markets are too complacent for rates regardless who comes in. This complacency is something we have noted as well. When do you think we will snap out of that . Could tax reform move us in that direction . Mark tax reform will be a big thing. Patricks argument is logical that there is a real desire to hike coming out of the fed and the market is suspicious and they might regret being suspicious. I could i into the narrative. I should clarify, i accept that taylor will be more hawkish than yellen or how will status quo. He will not suddenly be completely shift yields way higher. It is not as hawkish as taylor. Yet tax is if we do reform, that is a great thing for the growth story. I remain cynical that we will get a tax reform that is revolutionary to show shift growth that massively. Some kind of package will be delivered but it will be where we get an excited headline and we go how much did this change things . We could get a higher yield. I do nothing we have a change in tone in yield. Because the 30 year bull market dowants bonds come up we bonds. We are stuck in the range for a long time to come. Guy what do these guys mean for the shape of the curve curveoning flattening the in terms of the inflation outlook, is that where we should be looking, we should not be worrying too much about the levels. Fed is doing the job properly you will get a parallel shift. They are hiking as the Economic Outlook is improving. Guy the curve is flattening. Patrick it is not pricing in the fed saying what they will do. The economic numbers will want to continue the pace we have had for the last six months where you are getting jobs created. There is no inflation there but if you are looking at wage growth that there are some signs. If you look at companies issues that they cannot find quality people, Small Businesses are saying they are defining issues in that points to the beginnings of some inflation. Matt talk to me about the relationship between two year fx trade. The you have written something about this interesting overnight. Patrick there can be diversions Going Forward in terms of yields an dollar. The dollar does not have to track yields all the way up like we saw in november last year where there is a different narrative. There are headwinds to the dollar. We can get a bit more diversions, the dollar trade might be done to the topside where the yields can continue to go further. One of the issues, i believe we will get a flattening curve. Im interested to know that given there is no inflation, if we have a good growth story, and ok growth story and we buy into the narrative there are structural disinflationary pressures, why should the curves steepen . We know there is too much money out there, no sign of inflation, no reason to hike rates more aggressively two years down the line. I am not sure the curve should steepen, even if they hike another couple of times and if they do that with growth remaining strong. Patrick i would agree that would not lead to a steepening of the curve by any means but i do think we are starting to see the early signs that there will be inflationary pressures. You do not get unemployment down below 4 if you do not have Economic Growth with Interest Rates still very accommodative. I have characterized them at emergency levels. We have a accommodative fed, it is beginning to take away some of the juice. A be oldschool like a lot of the fed governors. Curve is not dead. The phillips curve is still there. It should be there when you have lots of jobs and wage growth, that is going to create demand for goods and lead to higher prices. We cannot see inflation now but the early signs that inflation may be around the corner are there. The fed will be hiking next year. Based on inflation that will be there which will mean the curve should not flatten. I do not know if they will steepen. It will be more about parallel do its jobe fed will hiking appropriately. We have the stronger economy and the beginnings of some inflation. We will say thank you aunt good buys to mark cudmore and kick it old school with Patrick Armstrong come out the ceo of plurimi wealth. On mliv , type it in on your bloomberg terminal. President x xi introduces the man who will, the man who will run china. Xi ease the door to being the door to xi president beyond 2022. This is bloomberg. Matt welcome back. I am matt miller in berlin, we are 12 minutes away from the start of trading alon alongside guy johnson. Leadershippdated its lineup. In a break with the succession system, all new members of the Politburo Standing Committee will be too old to roll after xi finishes his second term. He could stay in office beyond 2022. Lets go live to tiananmen is here. Tom mackenzie walk us through the Standing Committee and im curious, what are the roles, with what is too old and howled will xi how old will xi be . We are in the shopping district. We have gallery lafayette. Standingburo successor there is no that has been flagged. It does not mean he cannot nominate someone from the broader 25 member politburo. We know he is going to extend it 2022, possibly in a different form. These are loyalists, people he has worked with for years, sometimes decades. You have shades of gray. Is important, he works on the u. S. China trade relationship. He has been elevated to the Politburo Standing Committee. You have others who are more conservative so it is a mix. They are all primarily loyal to resident xi president xi. Your power base by naming a successor now, why not do it later . That does that tell us something about his policy priority that he wants to get stuff done earlier on in the are thoseperiod, what priorities going to be . Right that it does shift the focus to those higher days and how they are enacted. From the Positive Side you look at this and you have more streamlined power in decisionmaking and that could speed up reforms and make it easier for president xi to an act the policy. The concentration of power in one mans hands can be dangerous. Resident president xi is being compared to mousey tongue mao. Priority of growing the economy and that will have implications for private players. You might see in the next few months some moves to liberalize some sectors. Sectoro the banking particularly in the lead up to president trumps visit on november 8. Int thanks for joining us front of the gallery lafayette. We are still with patrick plurimi wealth. There is an unwritten rule of retirement at age 68. You cannot the president at age 68. Let me ask you what you think tenure and setting himself up. He has changed the face of chinese socialism to a more capitalist or western facing socialism. China more investable for you . Not changed our views on a cyclical basis on anything that has happened in the last few days. He is slowing the housing market. Positioned himself to do is create a longterm story which we have ethical tea problems inbe the west to be sounding off about. And equalizing the wealth between the richest urban dwellers and the poorest people in the rural areas is a very egg, important macro tailwind Chinese Consumer and economy. Not only has he no had successors in place, that creates the disharmony and leads to turmoil. If he does address that, he needs to put himself in longterm. Matt has he stabilized the countries around him, is the rest of em more investable with xi in place . Is a good question, anytime you have stability that is good for china. On itsocusing much more consumer. I do not think it will become the consumer for the world the way the u. S. Is anytime in the next decade that china will become a big purchasing country as well and that will help flow onto the merging the emerging markets. Interested in china, through metals are other areas . Patrick we were short renminbi and we closed that in march. Since that we have not put investments on equities. We have had incredible performance from some of the big tech companies. The governance is still an issue. I do not think we will see any signs that we are moving toward an open market by any means. He is backtracking about that. We need to talk about a new era where they are bringing in a model that is a new custom to china, not just mimicking what the west has built. That still creates questions. The state bank of india. The stock is up massively. Indian banks being recapped. They needed it. They needed to get money back into the economy. Emerging markets, there are some big ones, india and china. Do you have to invest in the bigger ones . Patrick the bigger ones are the easiest ways to look at to invest read we have emergingmarket inflation linked bonds. Im worried about inflation a little bit eerie at the epicenter when Inflation Numbers markets. L be emerging that is where you see demand and that demand could be going faster than supply coming in. Emerging market inflation bonds have a real yield of 3 which is an equity like risk him him to take some bond like risk characteristics. By 150 basisa hike points. Patrick armstrong, this cio of cio of plurimi wealth. Talk names in the second hour. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Guy european equities are called a little lower. Yesterday we saw u. S. Equities continuing to push on. Treasuries up 2. 4 . We are continuing to see numbers being posted. At the moment, european equities are drifting and we are we have seen this trade over the last few days. Yesterday we did not see a huge change at the end of the day. We are marking time. Matt i want to point out a chart that i have showed. A simple u. S. Treasuries chart. Just to reiterate, the big news in markets, asset prices. Treasury topping 2. 4 in yields. Weve gotten a warning from bill gross that this is a do or die moment for the treasury market. Guy lets take a look at the market open. With got ftse 100 down around. 1 . All expected to open in similar fashion. We are continuing to monitor what is happening in spain right now. What could be a fairly contentious weekend in spain. Matt, as expected,. 1 to. 2 in spain. I will be flying to frank for it for that. Here we can see u. K. Gdp forecast and white. Forecast in white we are going to get the Third Quarter number out in about an hour and a half. Will get thirdquarter u. K. Gdp and obviously though we are not as low as we were with regards to forecasts right after the brexit vote. Guy . lets talk about pencils, pens, raiders razors. Oh, all giving background. T is softening up a little bit lufthansa out with numbers, 1. 4 . On the upside, i am trying to pick out someon the upside, i ao pick out some names. [no audio] us. Ick armstrong still with patrick, you are long eurozone banks. The Regulatory Environment is getting tougher, not easier. Still trade on pretty big book discounts. Theoretically the european economy looks like it is doing pretty well. Patrick that is exactly our play. Banks and industrials are the two plays. The ecb is going to announce a tapering, maybe this week or it or in december. Where starring to see some Interest Rate margins for the banks. We are starting to see some Interest Rate margins for the banks. Banks in europe, you scratch the surface and there are problems. It are not many banks that this doesnt apply to. There are not many banks that this doesnt apply to. Most banks when you come down to a granular level have problems. Patrick most of them do and we are not in the cheaper banks. They dont have a significant amount of bad debt. Yield. Dend very well capitalized. We are attracted to cheap assets. The gutless issues then you referred to. Got less issues then you referred to. Matt the barclays analyst leaving to start his own research form. Research firm. Yet exit driving bankers you have bankers been giving out by brexit. Patrick european Banking System needs some consolidation. That might be a trend that we start to see. What you are talking about is a. Heme of david and goliath some big slowmoving banks and that creates opportunities for small, nimble competitors. That is good for the industry anytime you have a smaller, competitors challenging some the big goliaths. It is a trend that is likely to be seen because we are very topheavy on the banks. Matt what do you think about National Heroes . Deutsche bank is one that bit off a little more than he could chew. It has been punished for that then it could chew. It has been punished for that. Could you buy a dip in a country like that in a company like that . Patrick we dont have any of the equity. The scenario you outlined means it is liable. It doesnt attract shareholders necessarily. Guy where do the bulk of your investors come from . Currencies is be very important. Patrick how investors and funds . We got High Net Worth we have europe. Worth surround europe. Guy the u. K. Swissbased [no audio] which is fascinating. If i went to the states, i would only make 2. 6 . Do you do this on a nonhedge basis . Patrick everything as you just pointed out based in euro is not doing that well. Euros,buy our fund in you can buy swiss francs, sterling. Guy when you go into the states, it the do them on a the states, into do you do them on a hedge basis . Magical if im buying in multinational company, i will patrick if i am buying in a multinational company, i will hedge that. Guy if the companies is doing it for you, does it really matter. Patrick youre getting the benefit if you have a weaker dollar. If you have a weak dollar. Guy really interesting stuff. Youll see the options. You can change the currency on the righthand side of the screen. Patrick armstrong, thank you very much. Youre going to be joining our radio team live. A new challenge here on the high street. Banks report thirdquarter earnings. , stock isnd cofounder trading higher. That is next. This is bloomberg. Guy welcome back could i want to talk to you about a bunch of things. European equities are up and running with 10 minutes into the opening session. As you can guess, not a lot is going on, at least in the headlines. At 13,000. Trading at a bunch of other stories that are worth focusing on. [no audio] , the got this arg story kurds offering. You have seen the iraqis and the kurds today. Yet the one under 50 basis point hike guess you have this 150 basis point hike. , you caning the facts look around your bloomberg this morning, they are amazing stories. Stories. Are amazing matt i want to highlight one of the charts that hillary put for us today. You can access this yourself. This is a picture in china. We talk about the stability that xi has built in their. Built in there. We have the white bars here. The problem is total debt. That is the red figure. That is what investors look to for a warning sign when looking at chinese investment. Can they get that debt to gdp level down . This is one of the things that xi has been focused on in his coming time as president. Is one of the things that not only destabilizes china for investors, but all of the emerging markets. That is one of the things that gives you better payment for the risk you are taking. Guy lets talk about what is happening in the u. K. Banking sector. Metro bank has reported profits for the Third Quarter, 7. 2 million pounds. Can the challenge of bank fill the growth it needs to meet its 2020 target guy what will they are target . Mean . Ill a rate rise vernon hill joins us on the set. What will it mean for your business . Generally make more money when the yield curves it is the shape of the curve rather than the rates. I dont think the rate rise will slow down the british economy. Guy would your bank do a little bit better than a little bit better . Vernon we are doing great now. We had rented growth again in deposits and loans. Customer acquisition and metro. Ank is a completely new model we are in the market share camp, so we care less about the economic environment and our focus is on giving customers a real choice. Thank god the British Public has really responded. This quarter, our commercial deposits have become greater deposits, asumer we are filling a void in the commercial banking space. [no audio] a lot of demand for credit. Guy this is a big driver for the u. K. Economy. Tidbit. An interesting vernon brexit does not seem to have an effect [no audio] going toranches and more of an online model. In a sense, you are ahead of the pack on technology. You need to close some branches . Thinking you might do that . Vernon we are building all new stores. The big banks are burdened with lots of old Bank Branches that dont work. They are burdened with Technology System that is out of date. Metro bank is built fresh from scratch. We get to build new stores on new ip with the best instant tech. Our growth rate has been unbelievably high. Matt what is the most important inelopment in contact fintech . Vernon there is not one really important development. They are not going to replace the banks. Mobile i would say is the biggest change in the last four or five years. Mobile banking has become very important and we are proud to say and metro bank week won an award for best mobile banking app in britain. It is about delivering the Customer Experience in store, online, mobile, atm, whatever delivery channel the customer wants. Guy when it comes to mortgage lending, there is a price war that is vicious. People are switching out of variables because they cannot make money in that space. How is this one going to work out . You are going to look at the comparison website to look at the numbers you can get quoted on the cost of money. Sterling is good cost of money. Going down and down. Vernon i agree, the rates are very low in the markets very competitive. Very low and the markets very competitive. Bottom come down and incrementally grow up . Vernon if we could predict rates guy we would all be doing something else. Net interest margin, talk to me about lloyds is out with a number that was north of two this morning. Your numbers that 1. 94 your number is at 1. 94. The Net Interest Margin is the difference what you are thats what you earn on your loan book what you earn on your loan book. It is building fans by delivering a service and experience. We had the highest growth rate in britain, probably america as well designed around service. Itone buys an iphone because is cheap, they are buying the apple world. We like the yield curve to steepen because that is when the margins would improve. Booksder banks have old and old rates that are left on from the old days. Certainly, as rates change, you can see the margin improve. Matt does that change there is a bank here in germany which is a very new techie bank that the kids use to deal with daily transactions. If i think of an older bank bank inike huntington america, they like people to build up big deposits and try and convince those people to let them invest their money or do things with that cash. Those big cash piles in those older banks, you dont see like a new in 26. Is there a difference . Vernon youre not quite right on the american experience. The banks dont encourage people to invest money from their bank account. That is not the american model. Every bank has a different model. Guys, they have a very limited offering. They dont have a fullservice bank with a wider range of products. They do have a role to play. There is a space for them, but i have said that in many cases, they are the icing with no cake. Metro bank is a complete bank, commercial, consumer, a full array of products. Here is room for every model matt i am curious to ask and anybody who watches on a vaguely basis could anticipate the question do you see any room for bitcoin in banking echo banking . Vernon there is so much dispute about bitcoin. I really have no thoughts about where bitcoin is going. It is hard for me to see how it is going to change the basis of the banking world. Guy we talked about brexit. He said that london is a boomtown. His london still a boomtown . You said that london is a boomtown. Is london still a boomtown . Vernon right now london is a boomtown. Guy up next, going to kick just going to bring you the big cash stock movers going to bring you the big cash stock movers. , i rememberufacture them from a childhood. That is next. This is bloomberg. Spanish Prime Minister is speaking right now. My sense is he is looking for a way out for at least a time buying exercise being the next move. Saying thatnister saying the spanish Prime Minister is saying that [no audio] themselves time to get out of this corner, madrid and barcelona have talks themselves into. Have boxed themselves into. Circles, notical to be too heavyhanded. Well talk about the story later. Here is nejra cehic. Nejra starting with the biomedical company, swedish it was gaining more than 3 earlier. It raised its [no audio] sales organic growth slightly below 2 , but also its thirdquarter sales missed the lowest estimate pushing that stock quite lower. By. 9 . S up this is a Distribution Company based in the u. K. But global. It moves in reaction to amazon launching. Looking to replicate in the business place. Perhaps a little bit of concern around that in terms of. Ompetition pushing down analysts saying to watch ferguson as well. Matt lets get to Bloomberg Business flash p for that we go to Sebastian Salek. Sebastian Staterun Banks in india have surged. The government has promised to inject 32 billion. [no audio] growth rose. State bank of india saw its biggest gains in eight years. Punjab National Bank rose sharply. Blackstone groups ceo told bloomberg saudi arabia. About 400we have billion roughly without pif. As we expand, there is certainly scope, because we grow at least 10 a year. More. Ly sometimes a lot we are starting a variety of new businesses, so there is a real opportunity for many people to be investing with the firm. Sebastian renault has reported a [no audio] matt welcome to Bloomberg Markets. I am matt miller alongside guy johnson. We are 30 minutes into the trading day. Lets see how things are shaping up. Guy, a lot going on in the news. You see a picture of donald trump after his straw poll with senators, most of whom decided not to vote but trying to pick excuse me, a fed chair. Gdp readingweak from the u. K. Stop the bank of england hiking . That data job set 9 30. At 9 30. Ata drops a hike will not harm the economy. What is going on in spain tomorrow and the ecb in frankfurt on thursday afternoon. Guy there is a bunch of stuff out of the emerging markets that we are focusing on. We are watching what is going on in china where we have had the name of the Standing Committee. Indias banks have been recapped. A whole bunch of stuff going on. Then you got what is going on here in europe. We are watching carefully what is happening in spain. The main markets and what is going on there. This is the picture we have from a secular rotation point of view. Personal Household Goods and banks are trading higher. Real estate, that is where we are seeing the money ring taken off the table this morning. Money being taken off the table this morning. The sector rotation below that much more violent. Ere is Sebastian Salek sebastian chinas president has unveiled a new leadership lineup that includes no potential air potential heir. That breaks with a centuryold succession beyond 2022. Momentum tothe good continue modernizing chinas systems and capacity for governance. Determine assets to copper hand reforms and open china still wider to the world. Sebastian donald trump has asked Senate Republicans to show hands. The president took the straw poll during a lunch meeting yesterday. Say whonyn refuse to drew the most hands. Trump asked specifically about john taylor and Federal Reserve governor, jerome powell. Jeff flake has become the second token to resend donald trump publicly. Click announced that he will not seek reelection and delivered a blistering attack on the president on the senate floor. Remarks followed to Television Interviews followed two Television Interviews. [no audio] majority republicans pushed through a reversal of the financial protection bureau. Imits and a 51 to 50 vote mike pence was called in to cast the tiebreaking vote. Plans to crush catalonias separatist is ringing and alarm bell. According to two people with knowledge, they are balking at the governments taking a of the administration barcelona and shutting off options to allow to catalonians leadership dignify a retreat. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt sebastian, thank you very much it indias Staterun Bank surged in trading after the government pledged to inject 32 billion of capital into the lenders. State bank of india jumped as much as 25 , the biggest into gain intraday gain. Ets speak to Justin Carrigan a lot of confidence in the markets. This move will revive the sector. What have the problems been . Does it look like this is going to be a onetime fix . Sotin coleman you would hope just in he would hope so. There has been a lot of handwringing in india. Lack of credit growth was holding back the economy. This is clearly a big gesture to try to revive that part of the economy and we shall see what has happened. Will see the reaction in the bank stocks. It hasnt been so good for bonds and the rupee. One or two voices were hearing today saying that those effects can be mitigated by the way in which the indian authorities introduce this big capital injection. Guy how big a problem is this for the Indian Economy . We have talked about the npls and the fact that indian banks are not in a position that they need to be in order to lend to the economy. In five years time, is this going to be one of those points in time for the sake credibility test in time starts to turn a corner . Justin it is an interesting question. There are two dynamics. First is the willingness of banks to lend. The other dynamic is how much demand there is for loans. The whole nonperforming loan big bump forn a india. The level of these npls are the highest in 17 years. That you would hope that if it is the banks that have been unwilling to lend, this is the fix. Now we have to see if the demand and consumers and corporate [no audio] banking sector. Are you seeing a massive uptake for authentec four authentec . And less of a branch based system . Justin it is difficult to say. India has this reputation for the technical element of the economy. Fintech is going to be part of that. It is early days to make clear assessments of that. Morning andin this saw this 150 basis point hike in argentina. It came after the close. 150 is very aggressive, more than the market was looking for. Was this a surprise you what kind of reaction can we expect . Justin is certainly wasnt surprised. I dont think any economists expected this move. Benefitat it with the of hindsight, it does look to be interesting timing because macri has just done very well in his midterm election. Inflation has been the big stumbling block to the argentine story. It is something above 17 in the first nine months of this year, the highest among its peers. Fairly, macri and his finance team are serious about getting this under control. It could be good for the international bonds. We will see that when it opens. For the peso, perhaps less so for the stock market. The stock market has been on a tear in argentina. Guy justin, great coverage. Joining us out of dubai on the em story. There are so many elements. Capgeminis ceo, Paul Hermelin is going to be joining us. Thirdquarter sales rise. The story next. This is bloomberg. Matt welcome back to Bloomberg Markets. Imf matt miller in berlin alongside guy johnson in london and capgemini has reported thirdquarter sales growth of 0. 9 . The giant also forecast a 3 fullyear Revenue Growth in Constant Currency terms. Joining us is the ceo of capgemini, Paul Hermelin. What is driving the capgemini growth in the sector . What are the Biggest Challenges to picking that up . Currencywth, constant is 3. 4. [no audio] i would just say the down. Tionary spend some prudence because of the the softest market in europe. The rest of europe is doing very nicely. Guy paul, from london, it is guy. European companies have been slower than others to [no audio] guy different still got further to go. The data that im seeing out of the Northern EuropeanManufacturing Sector is sensational. Im looking at german pmi manufacturing north of 60. Do you think this is sustainable guy what do these kind of numbers is sustainable . What do these numbers mean . Paul the explosion of digital manufacturing, the Digital World , we have seen the ramping up of digital manufacturing which will be very beneficial to the germans. Germany as a german inc. I expect a very Strong Demand for service and manufacturing and notably in germany. Matt is Artificial Intelligence also going to be a key to the future . Where is capgemini on ai . Paul wiese to speak of we usedand people to speak of automation and people thought we were talking about rumors. Of artificialt intelligence in our manufacturing service. The new generation of robots and then we inject ai in the deep learning and Machine Learning of digital marketing. It is our new frontier. Issues if youe accept late that forward, what you need our engineers. The kind of people that are so in demand in Silicon Valley that the price tag that is associated with them is going through the roof right now. How big a problem is there for the situation . In terms of having the right staff in the right place to be able to deliver the kind of services that you need . Paul we were below the very visible to the american service. We have not been slow down by the visa shortage. But we still have to do in the u. S. Is extend our local recruitment. Everybodys trying to recruit in the Silicon Valley, close to new york. Presence, we local have started new recruitment channels, a lot of large cities. It can be overcome with with educational investment. If you saw the i. T. Department of georgia tech, caltech and m. I. T. , a lot of asian people in their departments. We have to become attractive again. Interesting, you talk about you do see that issue with the h1b be. There was a moment where i. T. Was central to india. Frankly it is a feature for everybody because we need machine running experts and the demand is very strong. Matt them he ask you about the analyst firm that said in a note , the Advertising Companies like omnicom, wpt, they are facing strong competition from firms like yours. The expected wave of consolidation. Does that make sense to you . Paul frankly, the looks to me like a stretch. The other day i heard my friend saying we will continue small acquisition. Testified by the ,pectacular win at mcdonalds can resist and beat the best american companies. We are in gauged with a Strong Partnership with some of them. Guess we are engaged with a Strong Partnership with some of them. Guy lets come back to the issue of germany. The need for digital manufacturing to become the future for germany. There is a huge push among the politicians in germany to try and digitalized the german economy. How far behind is it . Do you think enough german to go to university broadly . D think they go to university in redirect kind of do you think they go to university and read the kind of sciences necessary . Paul trained their management. [no audio] some i. T. Specialist. I think notably when it is related to the digital manufacturing business, some of the projects are germany. If you think of the [no audio] i really think the daimler, the extremely are really [indiscernible] there is a real shift in germany around information flow. About ai. Guy paul, just to clarify. Are they inclined to yours . Paul we work with the three big german manufacturers. Guy excellent. Paul, thank you very much. Good numbers this morning it up next, we are going to bring you the stocks on the move this morning. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Nejra cehic . Nejra sales beat estimates. If it is about the midas touch 5. 7 . Ci, caring rising it was good she they did power that thirdquarter sales growth dented powerd she that thirdquarter sales growth. Kering leading the gains. One of the biggest performances is novozymes. On the downside, im looking at antofagasta. Falling the most since september 8. Guidancesaying that for 2018 was disappointing. Guy thank you very much indeed. The biggest story that we are going to be covering over the next few days is what is going to happen with the fed. The president is holding a straw to raise hands to pick a fed chair. That is something we are going to be paying attention to in surveillance. 2. 4 seen to be a magical line in the2. 4 seen to be a magical linn the sand. Matt i guess [no audio] guess. H information, i the ecb decision is also important. Just a heads up, im going to head to frankfurt tomorrow and interview the cfo of Deutsche Bank and then run over to the European Central bank. Come back and watch us for that. Join us on bloomberg radio. We are going on daybreak europe. Up next it is fran. Francine president trump, taylor, powell and yellen to lead the fed. The ruling elite, with one thing missing, a successor. Force in the market to rethink boe uncertainty. That data drops in 30 minutes. This is bloomberg surveillance and im Francine Lacqua in london